Many Uber and Lyft passengers in California still assume they’re covered by a “$1 million policy” no matter what happens in a crash. Under California’s new rideshare insurance law that took effect in 2026, that assumption can be dangerously wrong if the at-fault driver is uninsured or underinsured.
California Senate Bill 371 quietly reduced the core coverage that protects passengers when another driver causes the collision and can’t pay. For injured riders facing real medical bills, that change matters far more than any headline about rideshare politics. Alvandi Law Group, P.C. has spent more than two decades handling personal injury cases across California and is already seeing how this new framework affects the real value of Uber and Lyft claims.
What SB 371 Changed in Rideshare Coverage & What Stayed the Same
SB 371, signed by Governor Gavin Newsom on October 3, 2025, and authored by Senator Christopher Cabaldon, took effect January 1, 2026. It amends California Public Utilities Code Section 5433, which governs how Transportation Network Companies (TNCs) like Uber and Lyft insure their trips.
The central change for passengers is specific and easy to miss: uninsured and underinsured motorist coverage during an active ride dropped from $1 million to $60,000 per person and $300,000 per crash. That coverage, called uninsured or underinsured motorist (UM/UIM) coverage, is what pays when another driver causes the crash and has no insurance, not enough insurance, or flees the scene.
What didn’t change is just as important. The $1 million third-party liability coverage that applies when the rideshare driver is at fault for the collision remains intact. If the Uber or Lyft driver negligently runs a red light or rear-ends someone and injures the passenger, that $1 million liability policy is still there. SB 371 targets UM/UIM, not the liability policy tied to the rideshare driver’s own fault.
Why the UM/UIM Cut Hits Passengers the Hardest
The coverage that shrank is the one many passengers are most likely to need. California consistently ranks among the worst states nationally for uninsured drivers, with estimates placing roughly 17 percent of motorists on the road with no liability insurance at all. Many others carry minimal limits that barely cover property damage, let alone serious injuries.
When one of those drivers hits an Uber or Lyft and causes a crash, the rideshare passenger often has no meaningful claim against the at-fault driver. In that scenario, UM/UIM coverage from the TNC becomes the primary lifeline. Under the old rules, that lifeline was up to $1 million. Under the 2026 rules, it’s usually capped at $60,000 per person.
Medical costs make that reduction stark. A single ambulance trip, emergency room evaluation, CT scan, and a night or two in a California hospital can approach or exceed $60,000, especially if surgery is involved. That doesn’t account for physical therapy, follow-up visits, lost wages, or long-term effects like chronic pain.
SB 371 also arrived as part of a broader legislative package alongside Assembly Bill 1340, which gave rideshare drivers new collective bargaining rights. Reduced UM/UIM coverage was widely described as part of the tradeoff that helped keep operating costs down for TNCs while lawmakers advanced other policy goals. For injured passengers, the bottom line is simple: there’s now far less automatic protection when a poorly insured driver causes a crash.
The Three Rideshare Insurance Periods & Why Trip Status Controls Coverage
To understand how SB 371 works, it helps to know how California divides rideshare coverage into three time periods. These periods are laid out in California Public Utilities Code Section 5433 and used by insurers to decide which policy applies.
Period 1: App On, No Ride Accepted.
The driver’s logged into Uber or Lyft and available to take requests but hasn’t accepted a passenger. Limited liability and UM/UIM coverage applies, backed by the TNC.
Period 2: Ride Accepted, En Route to Pickup.
The driver’s accepted a trip and is driving to the passenger’s location. Coverage limits increase compared to Period 1, but they’re still different from active trip coverage.
Period 3: Passenger in the Vehicle.
This starts when a passenger gets into the vehicle and continues until drop-off. Historically, this is when the full $1 million liability and $1 million UM/UIM coverage applied.
SB 371’s reduction targets Period 3 UM/UIM only. The rideshare driver can be driving safely, a third party can crash into the vehicle, and if that third party has no meaningful insurance, the passenger’s claim against the TNC is now limited to $60,000 per person and $300,000 for everyone injured in that crash.
Trip status at the exact moment of impact now has enormous financial consequences. If an insurer can argue that the ride hadn’t technically started or had already ended, it may try to place the claim into a lower coverage period or outside rideshare coverage altogether. Documenting Period 3 status is no longer just helpful; it’s a key step in preserving coverage.
SB 371 did create one meaningful process improvement for injured passengers. TNCs must now act as the primary UM/UIM policyholder from the start of the claim. Before this change, some companies tried to delay or deflect claims by first insisting on verifying the rideshare driver’s personal auto policy. Under the new framework, the TNC can’t require passengers to wait through that process before stepping in.
Hidden Coverage Layers Injured Passengers Might Overlook
With TNC UM/UIM coverage reduced, injured passengers need to think in terms of coverage layers rather than a single policy. The TNC policy is one layer, but it’s often not the only one.
Personal Auto Policy Stacking.
Many California passengers have their own auto insurance with UM/UIM coverage, even if they were riding in an Uber or Lyft at the time of the crash. In many policies, that personal UM/UIM can act as a secondary layer on top of the rideshare company’s $60,000 cap through a process often called stacking. The details depend on the policy language, including any exclusions about riding in a vehicle used for hire. Properly reading and applying those terms can significantly increase the total funds available to cover medical bills and other losses.
Non-Owner Auto Policies.
Some people don’t own a car but still carry a non-owner auto insurance policy. These policies can include UM/UIM coverage that follows the person rather than a specific vehicle. If a rideshare passenger carries non-owner coverage with UM/UIM benefits, that policy can, in some cases, provide an additional layer of protection when a negligent uninsured driver causes a crash.
Multi-Passenger Incidents & the $300,000 Cap.
SB 371 sets a $300,000 per-incident cap for UM/UIM during an active trip. That’s the total pool for everyone in the vehicle. If three passengers suffer moderate injuries, the available coverage may get divided in a way that leaves each person with far less than $60,000. In a collision involving multiple vehicles and several injured people, the math becomes even more strained.
Locating and coordinating all available coverage, including TNC policies, personal auto policies, non-owner coverage, and sometimes other sources like medical payments coverage, can determine whether an injured passenger has enough resources to pursue a meaningful recovery.
Key Steps to Take After a Rideshare Crash Under the New Law
Under the 2026 California rideshare insurance law, what passengers do in the minutes and days after a crash can affect how coverage applies. A few concrete actions help protect both health and legal rights.
1. Capture Proof That the Trip Was Active.
As soon as it’s safe, screenshot the Uber or Lyft app on your phone showing that the ride is active, including details like the driver’s name, license plate, route, and timestamp. If the app transitions to “trip ended” before you can capture it, you lose important contemporaneous proof of Period 3 status. If you can, take multiple screenshots as the app updates and send them to yourself or a trusted contact so they’re backed up.
2. Call Law Enforcement & Request a Report.
Ask the driver to pull over to a safe location and contact the police. When officers arrive, make sure they know you were a rideshare passenger and describe what happened in your own words. Ask how to obtain a copy of the report. A formal report helps establish who was at fault and that a crash actually occurred, which matters when later dealing with a TNC insurer or an at-fault driver’s carrier.
3. Document the Scene & Vehicles.
If you’re physically able, photograph the rideshare vehicle, any other vehicles involved, license plates, visible damage, traffic signals or signs, skid marks, and your own visible injuries. If there are witnesses, politely ask for their names and contact information. These details can help clarify fault and reconstruct what happened if the other driver later changes their story or leaves the scene.
4. Seek Prompt Medical Care & Follow Up.
Get evaluated as soon as possible, even if symptoms initially seem mild. Certain injuries, like concussions, spine injuries, and internal trauma, may worsen over hours or days. Tell every provider that you were injured as a passenger in a rideshare vehicle and make sure that information is recorded in your medical chart. Consistent treatment records become critical, especially now that UM/UIM benefits may cap at $60,000 and insurers scrutinize every gap in care to reduce payouts.
5. Notify Insurers, but Be Cautious with Recorded Statements.
Uber, Lyft, and any involved auto insurers will usually reach out quickly. It’s generally important to report that a crash occurred, but you don’t have to provide detailed recorded statements about fault or long-term injuries before you understand the full picture. Anything said early can be used later to limit compensation, especially once it becomes clear that multiple policies might be involved.
6. Review Your Own UM/UIM & Any Non-Owner Coverage.
Check your personal auto policy declarations page and any non-owner policy to identify UM/UIM limits and any exclusions. Many passengers assume their own policy doesn’t apply because they weren’t driving. In reality, those policies may provide the only meaningful secondary layer once the rideshare company’s $60,000 UM/UIM limit is exhausted.
Facing a Tougher Insurance Landscape After SB 371
SB 371 made California’s rideshare insurance system more complex at the exact moment injured passengers are least able to sort through multiple policies, unfamiliar legal terms, and aggressive claim tactics. The law narrowed one of the most important protections for riders in a state where uninsured and underinsured drivers are already common, while at the same time shifting TNCs into the role of primary insurer.
Understanding which coverage period applied, how California Public Utilities Commission rules interact with California Public Utilities Code Section 5433, where personal UM/UIM or non-owner coverage fits, and how to approach settlement negotiations without leaving money on the table isn’t straightforward. There are also broader developments, like Proposition 22 and Initiative 25-0022, which is seeking to qualify for the November 2026 ballot, that could further change how motor vehicle claims and attorney fees are handled statewide.
Alvandi Law Group, P.C. has devoted more than 20 years to personal injury and workers’ compensation cases across California, with offices positioned throughout the state and a record of more than $1 billion recovered. The firm’s attorneys work to identify every coverage layer available after an Uber or Lyft collision and handle cases on a contingency basis so clients pay no fee unless there’s a recovery. If you were injured as a rideshare passenger and need clarity on how the 2026 insurance changes affect your claim, you can contact Alvandi Law Group, P.C. at (800) 980-6905 to discuss your options.